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Stokvels help folk achieve dreams

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Century-old savings system helping many – especially woman – reach their property goals

Property stokvelling is gaining momentum in South Africa as more people realise their ownership dreams through this savings model. And as these dreams continue to be realised, so will bigger volumes of people join the phenomenon, says businessman Neo Mohlatlole, the co-founder and director of Stokvelex, an exhibition targeted at the stokvel market.

From their origins, stokvels – informal savings schemes started more than 100 years ago by black South Africans to help them stretch their money in difficult times – became an important part of black culture and have evolved into a credible means of buying property.

“People have witnessed neighbours creating a better life for themselves through stokvels and so are now also starting to work on their own independence.” Mohlatlole says the trend usually starts with family stokvels and “spills over” to include friends.

“With some social media activity and presence, you get to see more people joining stokvels with strangers.” Mohlatlole says some stokvel groups build and extend houses in the townships while others buy run-down buildings in the CBDs. Depending on their reach and access to information, the groups “tend to build on their home front before venturing into the business side of property”.

“The groups spend anything between R250 000 and R1 million on the properties. Some are for their own use and there go into the buy-to-let segment.”

The 2019 Old Mutual Savings and Investment Monitor says the traditional stokvel market has grown to an estimated annual value of more than R40 billion. It refers to property stokvelling as having an “enormous” potential for disruption.

“What started as an alternative savings mechanism outside of formal financial systems is today a significant force,” says Lynette Nicholson, head of research at Old Mutual. There is “no reason to believe that property finance is immune to millions of individuals pooling their resources for the benefit of stokvel members”.

Research into property stokvels was included for the first time in this year’s survey and polled 15 founders and 105 members of these schemes. The largest group surveyed has more than 550 members and accumulates R24m a year from monthly contributions that range from R3 500 to R15 000.

Nicholson says a stokvel with 100 members can “easily” reach an annual investment of R3m, and a group of 30 can accumulate R900 000 a year from relatively modest monthly contributions.

“The more ambitious property stokvels are building investment property portfolios that are used to create generational wealth, while many assist members to buy or build a family home. Others are focused on helping members buy materials needed to complete a project.”

Of the property stokvels focusing on homeownership and building homes for its members, Nicholson says 89% of members are female (89%). The National Stokvels Association of South Africa says that the stokvel economy is an estimated R49bn in South Africa alone.

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